A month ago, Li Bin expressed that Wei Lai was unwilling to "save money" because "there are more important things than earning money
On November 3rd, a month later, Li Bin, Chairman and CEO of NIO, issued a slightly heavy tone letter to all employees, announcing a 10% layoff.
According to NIO's financial report, as of the end of 2022, NIO had a total of 26763 employees, and it is estimated that nearly 3000 employees will be affected by the layoffs.
As for whether the 10% layoffs are structural or general layoffs, Li Bin did not specify in his internal staff letter, but only stated that "the company will also improve organizational efficiency by merging departments and positions that have been repeatedly constructed, changing inefficient internal workflow and division of labor, and canceling inefficient positions. The specific adjustments will be completed in November.
The person in charge of NIO told Times Weekly, "After this business and organizational optimization, we can achieve the goals of weight loss, muscle gain, cost reduction, and efficiency improvement
Along with layoffs, there are also more cautious investments. Li Bin stated that NIO will also postpone and reduce project investments that cannot improve the company's financial performance within three years.
Li Bin revealed that in the past two months, the company has held more than thirty two-year business plan analysis and discussion meetings to determine the goals, key success factors and priorities, action plans, required resources, and identify opportunities for organizational optimization, cost reduction, and efficiency improvement for each business in the next two years.
From the internal correspondence of all staff, Li Bin began to "listen to advice" and Wei Lai prepared to spend the winter ahead of schedule.
Gap
The next two years will be the most intense stage of competition in the automotive industry's transformation period. Although NIO has launched five new products this year and achieved over 40% market share in the pure electric market with a transaction price of over 300000 yuan, there is still a certain gap between its comprehensive performance and expected goals. "Li Bin emphasized the severity of the industry situation at the beginning of the entire letter, and also pointed out that NIO's performance is not in line with expected goals.
In October this year, NIO only delivered 16074 NIO cars, although there was an increase compared to September's 15641 cars, this is still far from enough.
In July and August of this year, NIO staged a strong comeback with a monthly sales volume of 20000 units. However, the data for September and October are gradually drifting away from the previous goal set by NIO of "average monthly sales exceeding 20000 units in the second half of the year".
At the mid-term performance exchange meeting this year, Li Bin provided delivery guidelines for the third quarter of 55000-57000 vehicles. In the third quarter of this year, NIO delivered a total of 55432 new cars, just past the lead.
After the launch of the EC6 by NIO in September this year, 8 models on the second-generation platform are currently on sale. According to official website information, NIO brand will not release new cars next year.
In addition, NIO's mass market brand "Alps" will release its first product in the second half of next year.
Li Bin mentioned several times before that NIO expects to achieve a breakeven in the fourth quarter, and the only way to achieve the goal is to "sell more cars".
Li Bin also emphasized internally that "ensuring sales and service capabilities to cope with fierce market competition".
At this year's mid-term performance meeting, Li Bin revealed that NIO is expanding its sales personnel and sales network based on a monthly sales volume of 30000 vehicles. "We will improve our sales capabilities starting from July, and our internal goal is to sell 30000 vehicles per month. We plan to complete the expansion of our sales network and team by the end of September
But in the first month of the fourth quarter, NIO's sales data gave Li Bin a head start, with a delivery of 16000 yuan far from the expected 30000 yuan.
However, the person in charge of NIO told Time Weekly that "this layoff is not related to the previous adjustment of the sales team. The person in charge stated that it is not convenient to disclose whether the adjustment is ordinary or structural.
However, according to 36 Krypton, the battery and phone adjustments may be the most significant.
Contraction
Previously, when communicating with media such as Time Weekly, Li Bin revealed that the mobile team consisted of approximately 600 people.
However, Li Bin stated that making a mobile phone is only about solving the user's entire lifecycle experience, and NIO will not make efforts in the field of mobile phones. NIO's focus is still on cars.
Previously, NIO's layout has been criticized for having no boundaries, but this time, Li Bin stated that in the past two months, the company has conducted more than thirty two-year business plan analysis and discussions to determine the goals, key success factors and priorities, action plans, required resources, and identify opportunities for organizational optimization, cost reduction, and efficiency improvement for each business in the next two years.
This means that NIO may have to "save flowers", or NIO plans to "focus on flowers".
According to the financial report, NIO's R&D investment has been above 1 billion yuan on average in a single quarter since the third quarter of 2021. Since the fourth quarter of last year, NIO's R&D investment has exceeded 3 billion yuan for three consecutive quarters, with a single quarter R&D expenditure of nearly 4 billion yuan in the fourth quarter of 2022.
In terms of personnel, due to the expansion of NIO's borders and investment in projects such as batteries, chips, and mobile phones, as well as the layout of its second and third brands, NIO had a total of nearly 30000 employees by the end of 2022, while the company had only 15204 employees by the end of 2021.
The increase in research and development and personnel has temporarily not had a direct impact on performance. NIO's net loss in the first half of the year has accumulated to 10.926 billion yuan, an increase of 139.07% year-on-year. Throughout 2022, NIO suffered a loss of 14.5 billion yuan. Starting from the second half of last year, NIO's cash and equivalents have decreased by billions almost every quarter. As of the end of the second quarter of this year, NIO's cash and equivalents on its books are only 31.5 billion yuan, of which cash (monetary funds) is approximately 13.724 billion yuan.
Previously, NIO's OEM factory, Jianghuai Automobile, announced that in order to further optimize its asset structure, it plans to transfer some assets through public listing, involving inventory, fixed assets, construction in progress, buildings and land use rights of the third factory of the passenger car company, as well as the structure and equipment assets of the new bridge factory of the passenger car company. The estimated value of the assets to be transferred is 4.49 billion yuan.
If NIO wants to acquire the Jianghuai Automobile OEM factory to obtain car manufacturing qualifications, the cost may be 4.49 billion yuan. If the cash on NIO's account is deducted from this amount, it may not be enough for NIO to lose several quarters.
In order to maintain the company's development, NIO is also seeking external funding. In June this year, NIO negotiated a strategic investment of approximately $1.1 billion for Abu Dhabi investment institution CYVN Holdings (hereinafter referred to as CYVN).
In September, another $1 billion in convertible bonds was successfully issued. However, financing costs are also quietly rising. According to the announcement, compared to the previous interest rates of 0% and 0.5%, the interest rates of the two new convertible bonds this time are as high as 3.875% and 4.625%.
Li Bin should be more aware of Wei Lai's ledger than anyone else.
Li Bin proposed layoffs and cuts in project investment that cannot improve financial performance within three years in a letter from all staff, but he still stated that "ensuring long-term investment in core key technologies and maintaining leading advantages in technology and products
Because Li Bin knows that the sales gap can catch up, but if the product competitiveness decreases, NIO may not be able to stay at the table in the future.
Qualifications
Li Bin's sense of crisis comes not only from NIO's own sales expectations, but also from competitors.
Compared to "Classmate Youth" Ideal and Xiaopeng, Ideal delivered over 40000 vehicles in October for the first time in a single month. Xiaopeng also added 20000 vehicles to the G6 and G9 facelift. As a former big brother, NIO's data is clearly not enough to look at.
And as soon as he turned around, there was also the "resurrection" of Wen Jie who quickly chased after him. In October, Wenjie's sales exceeded 10000 yuan, and with the support of the new M7, sales continued to soar.
In order to enter the finals, both old and new forces are coming with great force.
On October 31st, Ideal CEO Li Xiang posted on Weibo that after completing the monthly delivery of 40000 yuan for the three cars, he will continue to challenge the next higher difficulty: the overall 50000 yuan per month and the 20000 yuan per month for the Ideal L7.
Li Xiang's challenge of 50000 vehicles per month is based on the current L7, L8, and L9 models, and ideally, MEGA will be released by the end of the year. For new cars, Li Xiang has repeatedly spoken out, and MEGA will become the top seller of all passenger cars with a sales volume of over 500000 yuan, regardless of their energy and body forms.
Regarding MPV, Xiaopeng is also preparing to launch its competitor X9 and will conduct a review of the X9 spoilers on the 1024 Technology Day; The greater uncertainty is that Wenjie will also launch the M9 by the end of the year. After the new M7 is launched, official data shows that it has received 80000 orders within 50 days of its launch. For the M9, Yu Chengdong defines it as the "best SUV within 10 million".
In order to stay at the card table, Xiaopeng Motors changed even earlier. After He Xiaopeng took charge of the automotive technology team at the end of last year, he discovered the problem and decisively took down the entire battery team; Since the beginning of this year, he has killed 12 executives.
Regarding personnel, He Xiaopeng has also been reflecting recently, He said, "In 2019, the company had only about a thousand people, and by 2022, there were already 20000 people. At this growth rate, the company's management and operational capabilities have not yet been established, and too many people are still using their past experience to do what they are doing now. This is not enough. Competition is changing, technology is changing, and the personnel size has increased more than ten times. The difficulty of management has actually increased dozens of times. If you remain unchanged, the company will be gone
In order to maintain the company and qualify for the finals, NIO has decided to follow Xiao Peng's example and spend the winter ahead of schedule.
In this internal staff letter, Li Bin stated that "in order to achieve sales goals and the stable development of the company, NIO Automobile emphasizes the need to further improve execution efficiency and ensure sufficient resource investment in key businesses
We don't know if the layoff decision was made by NIO's management after the October sales data was released, or if they had already prepared for it.
After all, at the end of September, Li Bin stated, "From a competitive perspective, the next two years are still crucial. Not everyone can live through these two years, and we are also ensuring that we can live through them